I am writing as a follow up to my meeting of January 28, 1997 with you, Carmen E. Mendiola, Esq., Louann Wonski, Esq. of Ms. Mendiola's office, and the entire Township Council. Councilwoman Joan Pappen, who is recovering from recent surgery, participated in the meeting via telephone.

Mr. Thomas E. Atkins
January 31, 1997
Page 2

The meeting, attended by all five (5) members of Council, dealt solely with the issue of whether the Township Attorney, Donald T. DiFrancesco, Esq., should continue as Township Attorney in light of the Certification he filed with the Court in support of the Order to Show Cause filed on behalf of 2435 Plainfield Avenue, Inc., Difrancesco Development Company, Inc., Market One, Inc., Susan Dirancesco and the Estate of Clara DiFrancesco to reopen the Final In Rem Tax Foreclosure Judgment.

The second part of the meeting took place without Mayor Irene Schmidt and Councilman William McClintock present. The merits of the case and the application were discussed. I had previously ruled that Mayor Schmidt and Councilman McClintock have a conflict regarding the matter and therefore may not participate in, or discuss in any manner, the subject property.

On or about May 31, 1995, I was appointed Special Counsel to the Township Council of the Township of Scotch Plains with respect to the subject property, as well as Lots 9, 10, and 11 in Block 4303. I was specifically appointed because of the interest of various members of the DiFrancesco family in the property.

After I reviewed the files with Lawrence A. Woodruff, Es1., the Township Planning Board Attorney, I contacted the owners of the four

Mr. Thomas E. Atkins
January 31, 1997
Page 3

(4) lots, advised them of my representation and directed that all submissions and information regarding the property be directed to the Township Council through me. Part of my initial letter directed the owners to refrain from contacting the Township Attorney. Carmen E. Mendiola, Esq., whom I was advised was handling tax foreclosure matters for the Township, was provided with a copy of my letter.

It is apparent that I was retained because the Township Attorney was clearly and unequivocally not permitted to deal with the property which was owned by entities involving various members of his family.

On June 19, 1995, Lawrence Woodruff and I met with Donald DiFrancesco. To avoid any misunderstanding and any appearance of conflict or impropriety in Mr. DiFrancesco's part, I advised that all communications concerning the property from anyone with an interest therein were to be submitted through me. I further advised that Mr. DiFrancesco and Councilwoman (now Mayor) Schmidt were to refrain from any involvement with the properties. (Mayor Schmidt is, and has been, Mr. DiFrancesco's legislative aide). I further advised that Mauro Checchio, a former Mayor of Scotch Plains, Mr. DiFrancesco's uncle and mortgage holder, should have no communications regarding the property with anyone other than me. I further advised Mr. DiFrancesco that, in my opinion, the property owners should immediately pay the outstanding taxes on the properties. Finally,

Mr. Thomas E. Atkins
January 31, 1997
Page 4

I advised him that any proposal for the properties should be submitted through me to the proper municipal bodies for appropriate review.

Since that time, I have reviewed a title search which revealed that George W. Scott held a mortgage on the property. Mr. Scott secured a judgment against Donald T. DiFrancesco, apparently on the underlying note, for $553,359.56 on January 26, 1995. Mr. DiFrancesco has advised me (and, I understand, the Council) that he borrowed money to satisfy the judgment in April 1996. Council and I have been further advised that K. Hovnanian companies of North Jersey (the purchaser under contract of the subject property) has purchased the lien from Mr. Dirancesco and has therefore paid him most of the money that he paid to Mr. Scott. Accordingly, the judgment of foreclosure has a substantial financial impact of Mr. DiFrancesco.

On August 30, 1996, and In Rem Tax Foreclosure Judgment was entered in favor of the Township of Scotch Plains on the subject property. The judgment was recorded with the Register of Union County on October 16, 1996 vesting title in and to the property to the Township of Scotch Plains. I understand that the outstanding taxes approximate $85,000 and the value of the property is well in excess of $500,000.

Mr. Thomas E. Atkins
January 31, 1997
Page 5

On January 16, 1997, Robert H. Kraus, Esq., on behalf of the above-named defendants, filed an Order to Show Cause seeking to overturn the aforesaid in Rem Tax Foreclosure Judgment. In support of the Order to Show Cause, Mr. Kraus filed the Certifications of Ernest DiFrancesco, Donald T. DiFrancesco and himself.
The defendants raise three (3) issues in their attempt to overturn the judgment. They are as follows:

Has the Township of Scotch Plains violated its duty of good faith and fair dealing with respect to the defendants and K. Hovnanian Companies of North Jersey, Inc.?

Has the Township violated the due process rights of the Estate of Clara DiFrancesco by failing to effect proper notice of the action?

Has the Township violated the due process rights of all of the defendants by effecting service out of time?

In his supporting Certification, Donald T. DiFrancesco indicates that he is the Executor of his mother Clara's estate and that he has been the Township Attorney since January 1983. He further notes that his mother had a mortgage interest in the property and the "mortgage has been discharged and is no longer a lien on the property." Mr. DiFrancesco criticizes the governing body, the administrative staff of the Township, including the Tax Collector, and the foreclosing

Mr. Thomas E. Atkins
January 31, 1997
Page 6

attorney, Carmen E. Mendiola, Esq., for not directing a notice to him as Executor of his mother's estate at his address rather than the address set forth in the mortgage itself. I will not comment on the merits of that issue at this time, except to point out that Mr. DiFrancesco concedes that the mortgage has been discharged and is no longer a lien on the property.

Mr. DiFrancesco goes on to state in paragraph 19 of his Certification that he is "concerned about the issues of good faith and fair dealing and the failure to serve the notices within seven (7) days."

Although Mr. DiFrancesco was to have no involvement with this property, it is apparent that he did. On December 26, 1996, Robert H. Kraus, Esq. Faxed a communication to Carmen E. Mendiola Esq. and Mr. DiFrancesco. A copy is attached. The subject is a Consent Order reopening the August 30, 1996 foreclosure judgment. Although the "Mr. DiFrancesco" in the body of the communication is not spelled out, it would appear that it refers to the Township Attorney since he is the only one with any ostensible authority. At any rate, it is clear that Mr. DiFrancesco has been, and is, involved with the property.

It is my opinion that in light of the above, Mr. DiFrancesco should resign immediately as Township Attorney. I spoke to him on

Mr. Thomas E. Atkins
January 31, 1997
Page 7

The morning of January 28, 1997 and so advised him. I did so as a courtesy and out of respect for him since I have known him many years. I further advised him that I would advise the Township Council of my opinion that evening. I did so.

It is axiomatic that an attorney must not only refrain from any conduct which creates a conflict of interest but must also refrain from any conduct which creates the appearance of impropriety. This, in my opinion, is sufficient reason for Mr. DiFrancesco to resign as Township Attorney. The property is owned by an entity controlled by his cousin, Ernest DiFrancesco. His uncle and former Mayor of the Township, Mauro Checchio, holds a mortgage on the property and Mr. DiFrancesco has a financial stake in excess of $225,000 because of the judgment mentioned above. He has files a Certification is support of an Order to Show cause seeking to overturn the In Rem Tax Foreclosure Judgment and thereby depriving the Township of the ownership of this property. If the order to Show Cause is successful, he and his family members would obviously have a financial gain.

Mr. DiFrancesco has every right to protect his financial interests and those of his family members. However, under the circumstances, he cannot do so and continue to represent the Township. One cannot viev (sic> this matter in a vacuum and the entire

Mr. Thomas E. Atkins
January 31, 1997
Page 8

Picture must be studied. Mr. DiFrancesco is the chief legal officer for the Township of Scotch Plains and ostensibly the second most powerful public official in the State of New Jersey. As such, participating in an effort to overturn the above-mentioned judgment on property in which he and his family have an interest while continuing to serve as the Township Attorney is clearly a conflict of interest and improper.

The Rules of Professional Conduct governing attorneys provides in part as follows:

RPC 1.7 Conflict of Interest: General Rule

"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unlesss:

The lawyer reasonably believes the representation will not be adversely affected; and

the client consents after a full disclosure of the circumstances and consultation with the client, except that a public entity cannot consent to any such representation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved."
(emphasis supplied)(sic)

Mr. DiFrancesco, in his Certification, has questioned his client's good faith and fair dealing. This, in my opinion, is a per se conflict necessitating his resignation. Simply, in my opinion, there is both an actual conflict as well as an egregious appearance

Mr. Thomas E. Atkins
January 31, 1997
Page 9

of impropriety if Mr. DiFrancesco continues as Township Attorney. The citizens of the Township of Scotch Plains are entitled to undivided loyalty by all of their elected and appointed officials. The elected and appointed officials can serve only one master - the citizens of the Township. It is unfair to the citizens and to Mr. DiFrancesco to create divided loyalties and to in any way give the appearance of impropriety or undue influence.

Mayor Schmidt has requested that Council secure a second opinion regarding this issue. As I told her, this is certainly fine with me. I do understand that Council will meet for the purpose of passing a resolution to retain an attorney to research this issue on Tuesday, February 4, 1997. I am confident that Council will disseminate all of the information on this most troublesome piece of property to the attorney it retains for this opinion.

Kindly distribute a copy of this letter to Mayor Schmidt and the other four (4) members of the Council.